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H.B. No. 2912
AN ACT
relating to industrial development corporations; providing a civil
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2(11)(A), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(A) "Project" shall mean the land, buildings,
equipment, facilities, expenditures, targeted infrastructure, and
improvements (one or more) that are for the creation or retention of
primary jobs and that are [to promote new and expanded business
development or] found by the board of directors to be required or
suitable for the [promotion of] development, retention, or [and]
expansion of manufacturing and industrial facilities, [job
creation and retention, job training, educational facilities,]
research and development facilities, transportation facilities
(including but not limited to airports, ports, mass commuting
facilities, and parking facilities), sewage or solid waste disposal
facilities, recycling facilities, air or water pollution control
facilities, facilities for the furnishing of water to the general
public, distribution centers, small warehouse facilities capable
of serving as decentralized storage and distribution centers, [and]
primary job training facilities for use by institutions of higher
education, and regional or national corporate headquarters
facilities [for the promotion of development or redevelopment and
expansion, including costs of administration and operation, of a
military base closed or realigned pursuant to recommendation of the
Defense Closure and Realignment Commission pursuant to the Defense
Base Closure and Realignment Act of 1990 (10 U.S.C. Section 2687
note) as amended, and of facilities which are related to any of the
foregoing, and in furtherance of the public purposes of this Act,
all as defined in the rules of the department, irrespective of
whether in existence or required to be identified, acquired, or
constructed thereafter].
"Project" also includes job training required or
suitable for the promotion of development and expansion of business
enterprises and other enterprises described by this Act, as
provided by Section 38 of this Act.
"Project" also includes expenditures found by the
board of directors to be required or suitable for infrastructure
necessary to promote or develop new or expanded business
enterprises limited to streets and roads, rail spurs, water and
electric utilities, gas utilities, drainage and related
improvements, and telecommunications and Internet improvements.
SECTION 2. Section 2, Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), is amended by
adding Subdivisions (17) and (18) to read as follows:
(17) "Primary job" means a job that is:
(A) available at a company for which a majority
of the products or services of that company are ultimately exported
to regional, statewide, national, or international markets
infusing new dollars into the local economy; and
(B) included in one of the following sectors of
the North American Industry Classification System (NAICS):NAICS Sector # Description
111 Crop Production
112 Animal Production
113 Forestry and Logging
11411 Commercial Fishing
115 Support Activities for Agriculture and
Forestry
211-213 Mining
221 Utilities
311-339 Manufacturing
42 Wholesale Trade
48-49 Transportation and Warehousing
51 (excluding 51213 Information (excluding movie theaters and
and 512132) drive-in theaters)
523-525 Securities, Commodity Contracts, and Other
Financial Investments and Related
Activities; Insurance Carriers and Related
Activities; Funds, Trusts, and Other
Financial Vehicles
5413, 5415, 5416, Scientific Research and Development
Services
5417, and 5419
551 Management of Companies and Enterprises
922140 Correctional Institutions
(18) "Corporate headquarters facilities" means
buildings proposed for construction or occupancy as the principal
office for a business enterprise's administrative and management
services.
SECTION 3. Section 3(b), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(b) This Act shall be [liberally] construed in conformity
with the intention of the legislature herein expressed.
SECTION 4. Section 4A(i), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(i) Except as provided by this subsection, the corporation
may not undertake a project the primary purpose of which is to
provide transportation facilities, solid waste disposal
facilities, sewage facilities, facilities for furnishing water to
the general public, or air or water pollution control facilities.
However, the corporation may provide those facilities to benefit
property acquired for a project having another primary purpose.
The corporation may undertake a project the primary purpose of
which is to provide:
(1) a general aviation business service airport that
is an integral part of an industrial park; or
(2) port-related facilities to support waterborne
commerce.
SECTION 5. Section 4A(t), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(t) The department, with the assistance of the Texas
[Natural Resource Conservation] Commission on Environmental
Quality, may encourage the cleanup of contaminated property by
corporations created under this section through the use of sales
and use tax proceeds. A corporation created under this section may
use proceeds from the sales and use tax to undertake the cleanup of
contaminated property only if the use of tax proceeds for that
purpose is authorized by a majority of the qualified voters of the
city voting in an election called and held for that purpose. The
ballot in an election held under this subsection shall be printed to
provide for voting for or against the proposition: "The use of
sales and use tax proceeds for the cleanup of contaminated
property."
SECTION 6. Section 4B(a)(2), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(2) "Project" means land, buildings, equipment,
facilities, expenditures, and improvements included in the
definition of that term under Section 2 of this Act, and includes
job training as provided by Section 38 of this Act. For purposes of
this section, the term includes recycling facilities, and land,
buildings, equipment, facilities, and improvements found by the
board of directors to:
(A) be required or suitable for use for
professional and amateur (including children's) sports, athletic,
entertainment, tourist, convention, and public park purposes and
events, including stadiums, ball parks, auditoriums,
amphitheaters, concert halls, [learning centers,] parks and park
facilities, open space improvements, [municipal buildings,]
museums, exhibition facilities, and related store, restaurant,
concession, and automobile parking facilities, related area
transportation facilities, and related roads, streets, and water
and sewer facilities, and other related improvements that enhance
any of those items;
(B) promote or develop new or expanded business
enterprises that create or retain primary jobs, including a project
to provide public safety facilities, streets and roads, drainage
and related improvements, demolition of existing structures,
general municipally owned improvements, as well as any improvements
or facilities that are related to any of those projects and any
other project that the board in its discretion determines promotes
or develops new or expanded business enterprises that create or
retain primary jobs;
(C) be required or suitable for the promotion of
development and expansion of affordable housing, as defined by 42
U.S.C. Section 12745;
(D) be required or suitable for the development
or improvement of water supply facilities, including dams,
transmission lines, well field developments, and other water supply
alternatives; or
(E) be required or suitable for the development
and institution of water conservation programs, including
incentives to install water-saving plumbing fixtures, educational
programs, brush control programs, and programs to replace
malfunctioning or leaking water lines and other water facilities.
SECTION 7. Section 4B(a-5), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(a-5)(1) Notwithstanding any other provision of this
section, a corporation created under this section may use proceeds
from the sales and use tax to undertake a project described by
Subsection (a)(2)(D) or (E) of this section only if the use of tax
proceeds for that purpose is authorized by a majority of the
qualified voters of the city voting in an election called and held
for that purpose. The ballot in an [proposition at the] election
held under this subsection shall be printed to provide for voting
for or against the proposition: "The use of sales and use tax
proceeds for infrastructure relating to _______ (insert water
supply facilities or water conservation programs, as
appropriate)."
(2) An election held under Subdivision (1) of this
subsection may be authorized by the governing body of an eligible
city subsequent to an earlier election authorized under Subsection
(d) of this section [to adopt a sales and use tax under Subsection
(d) of this section must clearly describe the project to be
undertaken by the corporation if the project is described by
Subsection (a)(2)(D) or (E) of this section].
SECTION 8. Section 4B(c), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(c) The board of directors of a corporation under this
section consists of seven directors who are appointed by the
governing body of the eligible city for two-year terms of office. A
director may be removed by the governing body of the eligible city
at any time without cause. Each director of a corporation created
by an eligible city with a population of 20,000 or more must be a
resident of the eligible city. Each director of a corporation
created by an eligible city with a population of less than 20,000
must be a resident of the eligible city, be a resident of [or] the
county in which the major part of the area of the eligible city is
located, or reside at a place that is within 10 miles of the
eligible city's boundaries and is in a county bordering the county
in which the major part of the area of the eligible city is located.
Three directors shall be persons who are not employees, officers,
or members of the governing body of the eligible city. A majority
of the entire membership of the board is a quorum. The board shall
conduct all meetings within the boundaries of the eligible city.
The board shall appoint a president, a secretary, and other
officers of the corporation that the governing body of the eligible
city considers necessary. The corporation's registered agent must
be an individual resident of the state and the corporation's
registered office must be within the boundaries of the eligible
city.
SECTION 9. Section 4B(p), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(p) The department, with the assistance of the Texas
[Natural Resource Conservation] Commission on Environmental
Quality, may encourage the cleanup of contaminated property by
corporations created under this section through the use of sales
and use tax proceeds. Notwithstanding any other provision of this
section, a corporation created under this section may use proceeds
from the sales and use tax to undertake the cleanup of contaminated
property only if the use of tax proceeds for that purpose is
authorized by a majority of the qualified voters of the city voting
in an election called and held for that purpose. The ballot in an
election held under this subsection shall be printed to provide for
voting for or against the proposition: "The use of sales and use
tax proceeds for the cleanup of contaminated property."
SECTION 10. Section 38(b), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(b) A [Except as provided by Subsection (c) of this section,
a] corporation may spend tax revenue received under this Act for job
training offered through a business enterprise only if the business
enterprise has committed in writing to:
(1) create new jobs that pay wages that are at least
equal to the prevailing [average weekly] wage for the applicable
occupation in the local labor market area; or
(2) increase its payroll to pay wages that are at least
equal to the prevailing wage for the applicable occupation in the
local labor market area [the county in which the jobs are to be
located].
SECTION 11. Section 39, Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), is amended by
amending Subsections (b) and (c) and adding Subsections (e)-(h) to
read as follows:
(b) At least once in each 24-month period, the following
persons shall attend a training seminar regarding the operation of
a corporation created under this Act [sponsored by the department
under Section 481.0231, Government Code]:
(1) the city attorney, the city administrator, or the
city clerk of a city that created a corporation;
(2) the county clerk or the county attorney of a county
that created a corporation; and
(3) the executive director of the corporation or other
person who is responsible for the daily administration of the
corporation.
(c) A corporation shall present proof of compliance with
this section to the comptroller by presenting the certificates of
completion issued under Subsection (h) of this section [Section
481.0231, Government Code,] for each person that was required to
attend the training seminar. The comptroller may impose an
administrative penalty, in an amount not to exceed $1,000 for each
violation, against a corporation that fails to present proof in
accordance with this section.
(e) The training seminar described by Subsection (b) of this
section must:
(1) be provided by a statewide organization that
represents corporations organized under this Act, except as
provided by Subsection (f) of this section;
(2) provide at least six hours of instruction devoted
to topics relating to the legal and proper operation of a
corporation created under this Act; and
(3) be held at least four times per calendar year in a
different geographical region of this state.
(f) If the department or its successor determines that no
statewide organization is able to provide a training seminar as
prescribed by Subsection (e) of this section, the department or its
successor, in conjunction with the attorney general and the
comptroller, shall by rule develop a training seminar in
conformance with this section. The department or its successor may
enter into an agreement for the provision of a training seminar
developed under this subsection with any person determined by the
department or its successor to be qualified to provide the training
seminar.
(g) A person, entity, or organization that provides a
training seminar under this section may:
(1) charge a reasonable fee for attending the seminar;
and
(2) compensate an individual who provides instruction
at the seminar.
(h) The person, entity, or organization providing a
training seminar under this section shall issue a certificate of
completion, on a form approved by the comptroller, to each person
who completes the training seminar.
SECTION 12. The Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes) is amended by
adding Sections 40, 41, and 42 to read as follows:
Sec. 40. DIRECT INCENTIVE PROVIDED TO BUSINESS ENTERPRISE.
(a) A corporation created under this Act may not provide a direct
incentive to or make an expenditure on behalf of a business
enterprise under a project as defined by Section 2 or 4B(a)(2) of
this Act unless the corporation enters into a performance agreement
with the business enterprise.
(b) A performance agreement between a corporation and
business enterprise, at a minimum, must provide for a schedule of
additional payroll or jobs to be created or retained and capital
investment to be made as consideration for any direct incentives
provided or expenditures made by the corporation under the
agreement. The performance agreement must also specify the terms
under which repayment must be made if the business enterprise fails
to meet the performance requirements specified in the agreement.
Sec. 41. REQUIREMENT FOR THIRD-PARTY CONTRACT FOR BUSINESS
RECRUITMENT OR DEVELOPMENT. (a) This section does not apply to a
payment to an employee of the corporation.
(b) A corporation organized under Section 4A or 4B of this
Act must enter into a written contract approved by the
corporation's board of directors in connection with the payment of
a commission, fee, or other compensation or thing of value to a
broker, agent, or other third party who is involved in business
recruitment or development.
(c) A corporation that violates Subsection (b) of this
section is liable to the state for a civil penalty in an amount not
to exceed $10,000.
(d) The attorney general may bring an action to recover the
civil penalty in a district court in Travis County or the county in
which the violation occurred.
Sec. 42. ECONOMIC INCENTIVE FOR CERTAIN BUSINESS ENTERPRISE
PROHIBITED. (a) In this section, "related party" means a person or
entity that owns at least 80 percent of the business enterprise to
which the sales and use tax would be rebated as part of an economic
incentive.
(b) Notwithstanding any other provision of this Act, a
corporation created under this Act may not offer to provide an
economic incentive for a business enterprise whose business
consists primarily of purchasing taxable items using a resale
certificate and then reselling those items to a related party.
SECTION 13. Sections 2(11)(B) and (C), 38(a), and
38(c)-(e), Development Corporation Act of 1979 (Article 5190.6,
Vernon's Texas Civil Statutes), and Section 481.0231, Government
Code, are repealed.
SECTION 14. The changes in law made by this Act apply only
to a project that is undertaken or approved, by an election or
otherwise, on or after the effective date of this Act. A project
that is undertaken or approved before the effective date of this Act
is governed by the law in effect on the date the project is
undertaken or approved, and the former law is continued in effect
for that purpose.
SECTION 15. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2912 was passed by the House on May
10, 2003, by the following vote: Yeas 131, Nays 0, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 2912 on May 30, 2003, by the following vote: Yeas 138, Nays 1,
2 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2912 was passed by the Senate, with
amendments, on May 28, 2003, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor